Wall Street more than wiped away all of the big gains made the day earlier as investor worries turn to France. There was a lot of nervousness that French banks could take a hit from the European debt crisis, which would in turn jeopardize U.S. banks, and add further downward pressure on the global economy.
Societe Generale, France's second largest bank, was forced to deny accusations it was in bad financial health, after investors sent the stock reeling by as much as 23 percent.
Dan Haugh is president of PTI Securities.
SOUNDBITE: DAN HAUGH, PRESIDENT, PTI SECURITIES (ENGLISH) SAYING:
"Really this all started, for the most part on rumors of French banks today. I mean there is no way you can dispel the fact that that rumor might be true, might not be true - you just have to react to it on the floor. If you're greeted with that rumor and you see the next twenty orders in the bond pits are buys or the next twenty orders in the stock pits are sell, you are forced to go along with the order flow because it just might be true."
And with that, investors ran once again to the safety of gold. The precious metal crossed above $1800 for the first time on record.
SOUNDBITE: DAN HAUGH, PRESIDENT, PTI SECURITIES (ENGLISH) SAYING:
"Unless something is really resolved in Europe, you have to assume that gold is going to at least be a $100 to $200 higher at some point during the fall."
But it's not all Europe's fault. According to the latest Reuters/IPSOS poll, most Americans believe the U.S on is the wrong track, and tougher economic times are still to come.
When the dust settled on Wall Street - Blue chips slumped 519 points, a loss of 4.6 percent. The S&P 500 gave up 51 points, or 4.4 percent and the Nasdaq tumbled 101 points or 4.1 percent.
The losses were even bigger in Europe on a percentage term. Germany was down 5.1 percent, France was down 5-1/2, and the U.K. down 3 percent.
Conway Gittens, Reuters

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